You’ll never now the importance of portfolio management unless its too late. You might think that there’s nothing wrong in a heavy investment on one single asset because that’s safe, well in that case you’re doing it wrong and are supposedly at a 70% risk of loosing your funds if the market flips and you want to cash out for some reason.
Crypto investing is the new buzz, but in this highly volatile market some portfolios can shrink or expand by up to 20% in just a matter of minutes. Want a simple, risk-averse strategy to managing your portfolio? Maybe I can help you out.
Don’t take unnecessary risks (No blind investment)
Don’t forget the golden rules of investing: never bet what you can’t afford to lose and don’t react emotionally to changes in the market. Always put limit on your investments and don’t cross that line. Remember, investing $500 throughout the year every month is better than investing $6000 in one month. Imagine you invest $6000 on an ICO and the company just vanishes into thin air. That’s it, you loose your six grands. So keep it cool and play it safe. Calculate how much you can afford to put aside and keep investing it on a monthly or weekly basis.
Have a diversified portfolio (Invest smartly)
When it comes to value distribution the safest bet is to stick with the institutionally stronger crypto coins. A well structured portfolio will have around 50% of all capital in the lowest possible risk investment. Currently, this is Bitcoin. For more active trading, alts with market caps above $10 billion should compose another 30% of your portfolio. Consider Ethereum or Litecoin or Ripple. An additional 10–15% of your portfolio should go towards well-structured Alts which have a good team behind it and is constantly developing their product. And that last little percent? If you’re game, go for high-risk high-reward alts, try some of the projects lost in the fifth page of Coinmarketcap.
If your investment is very small, however, a more aggressive risk strategy might be more fitting to boost your way to becoming a crypto millionaire, but that comes with a lot of risks. Also, it is good policy to always keep some of your assets in fiat or a stable cryptocurrency like Tether, so you can move in on any unexpected opportunity without being forced to change your other positions.
Do your homework (Research before investment)
Don’t make blind investments! I repeat, don’t believe everything you read on the internet specially an article that says ‘a guide to crypto portfolio management’. Kidding, we are completely safe for you. Just Make sure to research the projects, the teams and their roadmap. Also snoop around the company’s twitter and Reddit, this will give you a clear idea as to how active the institution is. Remember, media can be manipulated but a majority of people on a social network won’t be that biased.
You can start by analyzing projects via a plethora of websites out there that reviews various projects. Look into the people behind the project, white papers and what influencers are saying about it.
Pick a strategy and stick to it
This is a must. Once you’ve designed your crypto portfolio distribution, simply maintain the proportions as you have defined them. This will ensure you buy low and sell high. For example, if your 10% investment in Ethereum triples in value, while the rest of your portfolio barely moved, the percentage of Ethereum in your portfolio will increase. See the benefit of it?
When this happens, sell part of it to rescale your assets to your original design. Then, use that profit to buy the coins that performed worst and Viola, by doing this, you will naturally be buying low and selling high.This might all sound like a piece of cake, but believe me, you emotions get the best of you. But if you follow these steps you will already be ahead of the curve against the greater majority of market investors. So pick up your phones and start researching. Remember, the internet is your best friend.
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